How geolocation mapping can safeguard customers’ financial transactions

The customer is always at the centre of innovation.

New business propositions are being tested out almost daily to deliver services that provide engaging experiences and more convenience. Contactless payments are a great example of an innovation that has made customers lives easier. And with the Internet of Things now becoming a reality, the coming, connected years will see more personalised experiences where physical interactions with customers will rapidly decrease. This is good news for both banks and customers, however, it’s crucial to also consider the security of this new way of engaging with customers.

Image-(10)Mobile devices have become far more than just a personal gadget, they are with us right from the beginning of the day until we get in bed. And increasingly, customers are willing to provide their location data to banks in return for personalised services. To ensure that financial transactions are not fraudulent, customers are prompted to enter personal data, answer security questions, provide memorable information and frequently change passwords. While these initiatives aim to safeguard customers, they can conversely open up new avenues for fraudsters to steal personal identifiable data.

An emerging field is the geolocation based fraud prevention approach. This checks the exact location of the customer with the payment transaction origin. Checking the geolocation ensures that genuine transactions are not declined (based on other fraud prevention rules). Increasingly, it has been observed that this approach is cutting down on fraudulent transactions and most importantly, safeguarding customer interests.

Banks considering a geolocation based fraud prevention solution should take into account the following:

  • Data privacy requirements for each country, which may require explicit opt-in from customers
  • Making use of location services from telco providers to enhance the coverage
    Employing analytics to analyse payment patterns and deliver a personalised experience
  • Engaging telco providers to provide the proximity location data (to ensure that the exact location of the customer is not being tracked – even though technically possible

Geolocation based fraud prevention can also be further developed to perform SimSWAP checks that further mitigate the risk of fraudulent activity by using real-time data to check if a customer has recently been issued a new sim. In summary, while the rapid changes in operating models are offering new opportunities to fraudsters, they are also providing opportunities to banks to introduce tighter controls without compromising on customer interest, convenience and experience.

This article was originally published on The Digital Banking Club, August 21, 2015 and is re-posted here by permission. 

Anil Awasthi

Director - Client Services for Cards & Payments, Virtusa. Anil has over 15 years’ experience in the IT industry, specifically in financial services. He has developed and architected end-to-end systems for banks and financial services institutions, focusing on information security and standards and compliance. Anil now concentrates on applying his hands-on experience to developing best-in-class solutions for his clients. Anil holds a Bachelor of Technology from the Open University of British Columbia.

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